International Journal of Government Auditing – July
2003
Ethiopia
Audit Profile: The Office of the Federal Auditor General of Ethiopia
History
Ethiopia, situated in the horn of Africa, is the oldest independent country in Africa and one of the oldest independent countries in the world. The history of Ethiopia's supreme audit institution (SAI) goes back to the early 1931 constitution, which stressed the importance of the proper collection of the state revenue and the necessity of procedures to control expenditures but stopped short of either referring to or requiring any audit as such. This, in fact, had to wait for proclamation 69 of 1944, which established the Commission for Audit.
Under this proclamation, the Commission was charged with the audit of the accounts of the Ministry of Finance, whereas the financial transactions of other ministries were inspected and controlled by the Ministry of Finance itself. A Comptroller and Auditor General and a Director General headed the Commission. The Commission reported directly to the Prime Minister.
The Commission for Audit had neither the professional independence of modern day SAIs nor the broad scope of audit covering budgetary organizations of the time. However, the latter shortcoming was corrected after only 2 years when proclamation 69/1944 was amended by proclamation 79/1946. The amended proclamation centralized the audit of all government accounts under one audit department, which was established as the Audit and Control Department, which continued under the leadership of the Comptroller and Auditor General and still reported to the Prime Minister. Although its status, which defined its independence, remained the same, its power and duties were substantially increased.
The Audit and Control Department continued to function until 1952 when it was amalgamated with the Ministry of Finance's Control Department without any legislative provision. This proved to be a clear setback in the process of developing an independent national audit institution. But the promulgation of the 1955 revised constitution put Ethiopia back on course to establish such an institution.
Articles 120 and 121 of the revised constitution of 1955 clearly conferred the rights and duties of auditing all ministries, departments, and agencies to the Auditor General, whose office was then established as a separate, independent entity that reported directly to the Emperor and to Parliament. These articles required the Auditor General to submit periodic reports to the Emperor and to Parliament on the financial operations of the government, and entitled the Auditor General to access all books and records pertaining to government accounts. However, detailed functions and reporting requirements were the subject of later legislation based on the provision of the constitution.
The detailed arrangements and functions of the office were later amended by
Parliament to include additional provisions requiring the Auditor General to appear before Parliament, when requested, to explain the execution of functions entrusted to him. The amended legislation was issued as proclamation 1961. The new proclamation, in addition to defining powers and duties, also envisioned conditions of appointment and independence of the Auditor General and reporting mechanisms.
The provisions of this legislation established an adequate basis for financial audit practice but did not provide a mandate for expanding the scope of audit to enable the Auditor General to carry out performance or program evaluation audits. However, this was done after the 1974 revolution when proclamation 164/1979 was issued to redefine the power and duties of the Auditor General.
Proclamation 164/79 substantially increased the traditional power and duties of the Auditor General by mandating that efficiency or effectiveness audits be performed. Although this proclamation established an adequate basis for the full practices of statutory audit, no further improvement was enacted to the enabling law of the Office of the Auditor General until the power and duties of the Office of the Auditor General were redefined by proclamation 13/1987.
Present Legal Framework
The current SAI of Ethiopia was established by proclamation 68/1997 under subarticle (4) of Article 101 of the constitution. This proclamation reinforces the independence of the Auditor General in the following ways.
- The Council of Peoples' Representatives, upon recommendation by the Prime Minister, appoints the Auditor General.
- The Auditor General is accountable to the Council of Peoples' Representatives and between sessions is accountable to the President of Ethiopia.
- The Office of the Auditor General has all the powers necessary to perform its functions.
Organization
The Auditor General is the head of the SAI, and he has the power to implement the duties of the office provided in the proclamation. The Deputy Auditor General directly assists the Auditor General in planning, organizing, guiding, and coordinating the activities of the office. Seven audit department heads, who are in charge of organizing, coordinating, and supervising the technical units (audit divisions), report to the Deputy Auditor General.
Audit Planning
In order to guarantee the quality of work, audit planning begins with the departmental heads requesting that the division heads submit their annual audit plans based on materiality and identified risks. These plans are submitted to the Plan Research and Quality Control Department, which develops a consolidated annual audit plan. After thorough review, the consolidated annual audit plan is discussed at the management meeting chaired by the Auditor General or the Deputy Auditor General. At this meeting, changes are made to the plan based on current government policies and issues. The revised plan is then submitted to the Plan Research and Quality Control Department, which prepares the final annual audit plan.
Each department is required to submit monthly progress reports, and these reports are compared with the annual plan in order to ensure adherence. Major deviations from the plan are discussed in the monthly management meeting in order to take corrective action.
Reporting
The law requires the Office of the Federal Auditor General to submit a consolidated annual audit report to the Council of Peoples' Representatives and, between sessions, to the President. The reports on the federal government's receipts and expenditures, assets and liabilities, and financial statistical data and on the accounts and performance of the offices and organizations of the federal government are the two main reports produced by the SAI.
Human Resources Management
In order to achieve its mission and attain high-level output in the audit report, the office has devoted considerable attention to staffing. Auditors are recruited from all disciplines in order to guarantee useful, complementary, and multidisciplinary skills. In this regard, the office's staff includes senior financial and accounting staff members, accountants, economists, statisticians, mathematicians, and computer experts. Most of the office's recruits come from universities and colleges; others are experienced vocational school graduates.
Future Prospects
The area currently receiving the most attention is building the capacity of the office and its auditors. To this end, the office has a plan to
- rain its staff to guarantee quality audit products,
- standardize audit processes and procedures,
- conduct more performance audits,
- maintain a high standard of financial and compliance audit work, and
- computerize its operation to ensure maximum efficiency.
For more information, please contact the Office of the Federal Auditor General, P.O. Box 457, Addis Ababa, Ethiopia; telephone: ++251-1-561840; and fax: ++251-1- 552594.